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The only way of getting the housing sector out of its long–running recession is by relying on the Housing Savings Account scheme.
The only way of getting the housing sector out of its long–running recession is by relying on the Housing Savings Account scheme.

Home Loan Priorities Announced

Identifying the right kind of demand in the housing market is the most important factor in the sector’s policymaking
The next recapitalization will turn Bank Maskan into the largest and most powerful bank in allocating mortgages while its capital adequacy ratio will be the highest among all Iranian banks

Home Loan Priorities Announced

Roads and Urban Development Minister Abbas Akhoundi has announced that residents of distressed urban areas and informal settlements, along with first-time homebuyers, are first in line to receive home loans.
"Identifying the right kind of demand in the housing market is the most important factor in the sector's policymaking," Akhoundi said during a meeting with Bank Maskan officials, the bank's website reported.
He enumerated a number of facts that Bank Maskan, as the housing sector's agent bank, should consider, as they plan for an effective roadmap for loan allocation.
"There are 2.6 million vacant houses in the country and more than 2 million residential units are considered second homes. This is while more than 19 million people in Iran live in unfavorable housing conditions and new families also need a roof over their heads, which should be considered in determining loan targets," he said.
Akhoundi made the remarks during the Bank Maskan 2021 Roadmap unveiling ceremony that was attended by the bank's top executives and officials.
According to the latest National Population and Housing Census carried out nationwide in September 2016, there is currently one vacant house for every 10 occupied houses while the situation is much worse in the capital.
Omid Ali Parsa, the head of Statistical Center of Iran, has said there are more than 490,000 empty homes in Tehran, up 13% compared with five years ago.
Akhoundi noted that the way to end property market stagnation is by identifying what kind of residential unit is actually needed under the current market situation.
"In the early 90s, the massive flow of migrants from rural areas to cities along with a rapid population growth led to a greater demand for residential units. But now the situation has changed and the type of demand is different, but unfortunately some of the housing policies conform to the old situation and new development have received less attention," he said.
Akhoundi said population growth is not as it used to be 30 years ago so the 2 million apartments built under the Mehr Housing Scheme, which was a direct, vast and unprofessional intervention of the government in the housing sector, had no outcome but an excessive supply of housing units.
"It is important to determine the best approach to housing sector financing since the direct involvement of the government in the market and mass construction will not solve the problem," he added.

2021 Roadmap
Akhoundi said the roadmap aims to allocate housing sector resources where the real demand is.
"Non-performing loans and frozen assets are considered a serious crisis for banking sector while a notable volume of banks' frozen assets are in luxury and expensive vacant homes," he said.
A huge amount of banks' capital has been spent on the construction of luxury and big houses, especially during 2011-13 when there was a hike in house prices, tempting banks to enter the business and embark on mass construction.
"The only way of getting the housing sector out of its long–running recession is by relying on the Housing Savings Account scheme," he said, noting that small savings of families should be used to provide them with loans.
"This scheme works only if people are sure that the saving system works properly and they will get their loans in due time," he added.
Housing Savings Account, launched in June 2015 for the first time, aims to provide first- time homebuyers with loans at an interest rate of 14%, which was later reduced to 9.5% in February 2017. The scheme requires applicants to make an initial deposit and wait for a year to become eligible for the loan.
Akhoundi noted that in order to ensure that the bank will not face any fund shortage in allocating loans, the ministry is trying to add another 50 trillion rials ($1.33 billion) to its capital, which will definitely happen in the foreseeable future.
"The next recapitalization will turn Bank Maskan into the largest and most powerful bank in allocating mortgages while its capital adequacy ratio will be the highest among all Iranian banks," he said.

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